EXPERT OPINION
Top 10 business risks facing mining and metals in 2017-2018
Victor Kovalenko , Climate Change and Sustainability Services Regional Director in Central Asia , Caucasus , Ukraine and Belarus , EY
Iurii Timonin , Manager , Climate Change and Sustainability services
EY has issued its global research of the top business risks facing mining and metals companies every year over the past decade . In this article , we consider key highlights of the recent EY report Top 10 business risks facing mining and metals in 2017-2018 .
Here is the list of the 10 most critical risks that mining and metals companies have encountered recently .
1 . Digital effectiveness ( new )
While the concept of digital mining is not new , there is a strong disconnect between the potential effect of digital transformation and actual implementation of new technologies by mining and metals companies . Today , technology advances faster than it can be adopted . Therefore , sector players need to be pragmatic when selecting and implementing digital enhancements while focusing on key business objectives , such as increased production and margins .
2 . Competitive shareholder returns ( new )
The sector has consistently underperformed in terms of returns to shareholders in recent years . During the period under analysis , the allocation of capital was focused on returning cash to shareholders through dividends and share repurchases , rather than on investment in longer-term projects . Therefore , companies will have to strike a balance between investment in new projects ensuring sustainable growth and shareholder returns .
3 . Cyber ( 9th in 2016 )
Cybersecurity is becoming increasingly important for mining and metals companies . With heavier investment in digital technologies and the penetration of IT solutions across nearly all business segments , cyber-attacks are becoming one of the top threats for industry players . Companies should adopt the approach that it is no longer “ if ” but “ when ” a cyber-attack will occur , and , therefore , accelerate investment in cybersecurity accordingly .
4 . New world commodities ( new )
Continuous innovation and a focus on sustainability are having a major impact on future demand for commodities from the mining and metals sector . For example , the development of electric cars is driving demand for platinum , cobalt , lithium and other commodities , whereas increased adoption of renewables is putting serious pressure on the coal market . Companies need to continuously monitor changes in demand for commodities and regularly review their production project portfolios .
5 . Regulatory risk ( new )
Regulatory risk has increased in the analyzed period as many governments demand a greater return from , and oversight of , their natural resources . Developed countries have implemented new laws aimed at greater local involvement , which has increased general risks in the sector . In such circumstances , companies need to
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